15 December 1994 [shall
come into force from 1 January 1995];
6 November 1996 [shall come into force from 10 December
1996];
8 July 1999 [shall come into force from 3 August
1999];
6 April 2000 [shall come into force from 4 May
2000];
15 May 2003 [shall come into force from 1 July
2003];
26 February 2004 [shall come into force from 18 March
2004];
6 April 2006 [shall come into force from 9 May
2006];
12 March 2009 [shall come into force from 15 April
2009];
10 June 2010 [shall come into force from 14 July
2010];
30 September 2010 [shall come into force from 1January
2011];
7 April 2011 [shall come into force from 11 May
2011];
10 November 2011 [shall come into force from 1 January
2012];
18 April 2013 [shall come into force from 22 May
2013];
19 September 2013 [shall come into force from 1 January
2014];
5 December 2013 [shall come into force from 1 January
2014].

If a whole or part of a section has been amended, the
date of the amending law appears in square brackets at
the end of the section. If a whole section, paragraph or
clause has been deleted, the date of the deletion appears
in square brackets beside the deleted section, paragraph
or clause.

The Saeima1 has adopted and
the President has proclaimed the following Law:

On
Accounting

Chapter I
General Provisions

Section 1.

This Law applies to merchants, co-operative societies, foreign
merchant branches and non-resident (foreign merchant) permanent
representations, associations and foundations, political
organisations (parties) and the associations thereof, religious
organisations, trade unions, institutions financed from the State
budget or local government budgets, the State or local government
agencies and other legal and natural persons who perform economic
activities (hereinafter - undertaking).

[6 April 2006]

Section 2.

An undertaking has a duty to organise the accounting. The
accounting shall clearly reflect all economic transactions of the
undertaking, as well as each fact or event which causes changes
in the state of the property of the undertaking (hereinafter -
economic transactions). Accounting shall be conducted so that a
third person qualified in the area of accounting may obtain a
true and clear representation of the financial position of the
undertaking at the date of the balance sheet, the results of the
activities thereof, the cash flow for a specific time period, as
well as be able to determine the beginning of each economic
transaction and trace its course.

The accounting information provided shall be truthful,
comparable, timely, significant, understandable and complete. The
accounting shall ensure allocation of income and expenditure by
accounting periods.

The head of the undertaking shall be liable for the
maintaining of the accounting and the preservation of all the
originals, copies or representation of data of all documents
substantiating economic transactions.

A head of an undertaking is:

1) for a partnership - all the members of such a partnership
or the members of the partnership having special authorisation to
represent the partnership;

2) for a capital company - the board of directors;

3) for a co-operative society - the board of directors or the
person who fulfils the functions thereof according to the
procedures laid down in the articles of association of the
society;

4) for an individual enterprise, farming or fishing enterprise
- the owner of the enterprise;

5) for a foreign merchant branch and non-resident (foreign
merchant) permanent representation - the person authorised to
represent the foreign merchant (non-resident) in the activities
related to the branch or the permanent representation;

6) for an institution financed from the State budget or a
local government budget, the State or local government agency -
the head thereof;

A head of an undertaking shall organise the accounting
procedure in conformity with the requirements of this Law.

[6 April 2006]

Section 4.

For accounting purposes, information and data, which in
accordance with the existing laws and regulations is required to
be included in the reports of an undertaking, shall not be deemed
to be commercial secrets.

All other accounting information of an undertaking shall be
deemed to be commercial secrets and shall be accessible only for
audits, the tax administration for verification of the
correctness of tax calculations, as well as other State
institutions in cases provided for by legislative enactments.

[6 November 1996]

Section 5.

The measure of value to be used in accounting shall be
euro.

The foreign exchange rate to be used in accounting is the euro
reference rate published by the European Central Bank, but if
there is no euro reference rate published by the European Central
Bank for the particular foreign currency, the currency market
rate in relation to euro published in a periodical of a provider
of financial information recognised by the world financial market
or on its website shall be used.

If the measure of value in a corroborating document is foreign
currency, the sums indicated therein in terms of money for
records in accounting registers shall be recalculated in euro
according to the foreign currency rate to be used in accounting,
which is in effect at the beginning of the day of economic
transaction.

The day when money is received or paid accordingly, the day
when goods or services are purchased or sold, as well as any
other day on which changes in the state of property of an
undertaking have actually taken place shall be deemed the day of
economic transaction.

An undertaking which prepares an annual account in accordance
with the laws governing activities of participants of the
financial and capital market and the regulatory provisions of the
Financial and Capital Market Commission, if there are sufficient
grounds, may derogate from the provisions of Paragraph three of
this Section and use another source of currency market rate for
recalculation of a sum expressed in a foreign currency in the
corroborating document into euros.

[19 September 2013]

Chapter
II
Maintaining of Accounting Registers

Section 6.

Accounting registers shall be maintained in the Latvian
language and kept together with source documents in the territory
of Latvia. If a foreign legal or natural person participates in
the economic transactions, another language, by agreement of the
parties, acceptable to such person and auditors, may be used. If
codes, abbreviations, single letters or symbols are used in the
records, explanations shall be provided thereof.

[6 November 1996]

Section 7.

Entries supported by source documents shall be made in
accounting registers. A source document is a document attesting
the existence of the economic transaction of the undertaking and
including at least the following document requisites and
information regarding the economic transaction:

1) the name of the document author (firm name), but in case
the document author is a natural person - the given name and
surname;

2) the registration number of the document author (if in
accordance with the law the document author shall be registered),
but in case the document author is a natural person - personal
identity number (if any has been granted to the person);

3) for an external source document - also the legal address
(if in accordance with the law the document author shall be
registered) or address (if in accordance with the law the
document author shall not be registered), but in case the
document author is a natural person - also the address specified
by the person or, if none has been specified, a declared place of
residence;

4) title of the document type;

5) date of the document;

6) registration number of the document;

7) signature (except for the cases referred to in Section
7.1);

8) for specific types of source documents - also other
mandatory document requisites provided for by laws and
regulations;

9) participants of the economic transaction, specifying the
name (firm name), registration number (if in accordance with the
law a participant of the economic transaction shall be
registered), legal address (if in accordance with the law a
participant of the economic transaction shall be registered) or
address (if in accordance with the law a participant of the
economic transaction shall not be registered) of each participant
of the economic transaction, but in case a participant of the
economic transaction is a natural person, specifying the given
name and surname, personal identity number (if any has been
granted to a person), address specified by a person, or, if none
has been specified, a declared place of residence;

10) description, basis and quantifiers (volumes, amounts) of
the economic transaction, but in cases laid down in the laws and
regulations - also other information regarding the economic
transaction.

If there is an external source document regarding an economic
transaction, it shall be given priority in comparison with any
internal source document.

A document drawn up at another undertaking shall be considered
to be an external source document, as well as such document which
has been drawn up in the undertaking itself for submission to
another undertaking. All other source documents shall be deemed
to be internal source documents of the undertaking.

Entries in the accounting registers shall be made timely,
ensuring that they are complete, precise and systematically
arranged. Entries whose content or quantifiers differ from the
source documents shall not be allowed.

Entries in the accounting registers or source documents shall
be corrected or supplemented taking into account the requirements
included in the laws and regulations which determine maintaining
and organising of the accounting.

Maintaining of accounting registers only electronically shall
be allowed only in case the requirements of this Law are not
violated, furthermore, representation of such registers in a
legible form on a computer monitor and, if necessary, also the
possibility to make derivatives thereof in the paper form shall
be ensured.

If a source document is in the paper form, the requisite
"signature" in this document shall be drawn up taking into
account the requirements of the Law On Legal Force of Documents.
The requisite "signature" in the electronic source document shall
be drawn up taking into account the requirements of the
Electronic Documents Law.

Other requisites of the source document shall be drawn up in
accordance with the requirements included in the laws and
regulations laying down the procedures for developing and drawing
up the documents.

[7 April 2011]

Section 7.1

An internal electronic document which does not contain the
requisite "signature", if it has been attested (authorised) by a
person responsible for the performance of the economic
transaction and the correctness of the information provided in
the source document in accordance with the procedures stipulated
by the head of the undertaking may also be regarded as an
internal source document.

A document issued to the undertaking - the recipient of goods
or service - by another undertaking for payment, if it does not
contain the requisite "signature", but the existence of the
economic transaction referred to in this document is
substantiated by another external document having legal force
within the meaning of the Law On Legal Force of Documents, may
also be regarded as an external source document.

A document issued to the undertaking - the recipient of goods
or service - by another undertaking for payment and which does
not contain the requisite "signature" and it is not possible to
fulfil the condition referred to in Paragraph two of this
Section, if the existence of the economic transaction referred to
in this document is attested by a person of the document
recipient (undertaking) responsible for the performance of
economic transaction and the correctness of the information
provided for in the source document in accordance with the
procedures stipulated by the head of the undertaking, may also be
regarded as an external source document.

A document which does not contain the requisite "signature"
and which upon request of the undertaking - user of payment
service - is issued by the provider of payment service (within
the meaning of the Law On Payment Services and Electronic Money)
on the fact that a payment order (task) of the undertaking - user
of payment service - is performed, if the existence of the
economic transaction referred to in this document is attested by
a person of the document recipient (undertaking - user of payment
service) responsible for the performance of economic transaction
and the correctness of the information provided in the source
document in accordance with the procedures stipulated by the head
of the undertaking, may also be regarded as an external source
document.

A non-confirmed account statement of the undertaking - user of
payment service - which upon request of the user of payment
service is issued by the provider of payment service (within the
meaning of the Law On Payment Services and Electronic Money) if
the existence of the economic transaction referred to in this
statement is attested by a person of the document recipient
(undertaking - user of payment service) responsible for the
performance of economic transaction and the correctness of the
information provided for in the source document in accordance
with the procedures stipulated by the head of the undertaking,
may also be regarded as an external source document.

[7 April 2011]

Section 8.

Recording of cash operations shall be done in such a manner
that each payment received, and disbursed, is recorded daily. The
cash balance at the beginning of the day shall be stated, the
income and expenditure of the day shall be totalled, and the cash
balance at the end of the day shall be calculated, every day.

Undertakings in which the average daily cash income does not
exceed 150 euros may calculate the cash balance on a weekly
basis.

Undertakings which use cash registers or similar data
registration equipment may record the income by one entry for the
whole day. Other source documents received, regarding the
economic transactions of the undertaking, shall be recorded in
the accounting registers as soon as possible but not later than
within 15 days after the end of the month, in which the document
was received by the undertaking, and their recording at the end
of the accounting period is mandatory.

1) individual merchants, individual enterprises, farming and
fishing enterprises whose turnover (income) from the economic
transactions during the previous accounting year does not exceed
300 000 euros, other natural persons who perform economic
activities. The abovementioned persons may organise their
accounting by the simple entry system in accordance with the
procedures laid down in the Cabinet;

2) associations, foundations, trade unions and religious
organisations whose turnover (income) from the economic
transactions during both the current and previous accounting year
does not exceed 40 000 euros. They may organise their accounting
by the simple entry system.

[10 November 2011; 18 April 2013;
19 September 2013]

Section 10.

Source documents, accounting registers, inventory lists,
annual accounts and accounting organisation documents of the
undertaking shall be systematically arranged and kept in the
archives of the undertaking.

The time period for storage of the documents shall be as
follows:

for annual accounts - until reorganisation of the undertaking
or termination of the activity thereof, insofar as it is not
otherwise specified in other laws and regulations;

If accounting is conducted electronically, the period for
storage of the data as determined in Paragraph two of this
Section shall be ensured.

If an undertaking is being reorganised or activity thereof is
terminated, the liquidation commission or the head of the
undertaking, shall, co-ordinating with the National Archives of
Latvia, determine the procedures for subsequent storage of the
archives of the undertaking.

The head of the undertaking shall be responsible for
maintenance of the archives of the undertaking.

An undertaking has the right to convert the documents referred
to in Paragraph one of this Section in electronic form for
storage in electronic environment taking into account the
procedures laid down in the laws and regulations governing the
field of archives by which the public records are converted in
the electronic form for storage in the electronic environment,
the technical requirements for conversion, as well as the
procedures by which the obtained records are to be stored and
converted public records are to be destroyed

[15 May 2003; 7 April 2011]

Chapter
III
Inventory and Reports

Section 11.

An undertaking, which commences activities, shall perform an
inventory, in which all the property owned and being in use of
the undertaking on site is determined, as well as compare amounts
of undertaking and debtor and creditor claims and obligations.
The results of the inventory shall be reflected in inventory
lists. The evaluation of the property, including the claims and
obligations shall be made in accordance with the procedures laid
down in laws and regulations. In the future, such inventory shall
be performed at the end of each accounting year, as well as when
terminating the activities of the undertaking or reorganising
thereof, or if a matter has been initiated for the declaring the
undertaking as insolvent, or if, on the basis of a decision of
the merchant, the activities of the merchant have been suspended
or renewed.

The Cabinet shall issue regulations regarding the evaluation
in accounting and reflection in the financial reports of the
property of the undertaking, including of the claims and
obligations in the case of terminating the activities of the
undertaking or the structural unit thereof.

An individual enterprise, farming and fishing enterprise, as
well as individual merchant and another natural person performing
economic activities, shall apply the provisions of Paragraph one
of this Section to the property provided for or utilised for the
performance of economic activities.

[6 April 2006; 5 December 2013]

Section 12.

Inventory of identical objects may be also performed by
sampling, using mathematical statistics methods for the
evaluation of data. The value of material resources established
in such manner shall not differ significantly from the results of
a general inventory.

It is not mandatory for the closing inventory of the
accounting year to be performed on the last day of the accounting
year, if it is possible, on the basis of the accounting data, to
determine the true form and amounts of material values, and their
evaluation in monetary units, without performing an inventory on
site.

The closing inventory of the accounting year may be performed
within three months prior to the final day of the accounting year
or within a month after it, recalculating the balances
established on the day of the inventory in accordance with the
accounting data on the final day of the accounting year.

Section 13.

Upon commencing the activities of an undertaking, on the basis
of the inventory data determined in Section 11 of this Law, an
opening balance sheet shall be drawn up. All the same provisions
shall apply to the opening balance sheet as apply to the annual
account balance sheet.

When reorganizing an undertaking or terminating its
activities, a closing financial statement of the activities of
the undertaking (hereinafter - closing financial statement) shall
be drawn up, if it is not laid down otherwise in laws and
regulations. Upon suspending the activities of a commercial
company, on the basis of a decision of the merchant, a report on
economic activities shall be drawn up. The closing financial
statement and the report on economic activities shall be drafted,
examined and published in accordance with the provisions provided
for in the laws and regulations regarding drafting, examination,
submission and publication of annual accounts. In addition, the
closing financial statement and the report on economic activities
shall provide detailed information regarding the losses caused by
reduction in the value of the assets due to the reorganisation,
or termination or suspension of the activities of the
undertaking, indicating the basis for calculating the amount of
losses and the impact of such losses on the evaluation of the
component items of the financial statement.

Annual accounts shall be drawn up for each accounting year
whose structure, volume and content, as well as the procedures
for drafting, examining and submitting them, are laid down in the
Annual Accounts Law, the laws governing the activities of
participants in the financial and capital market and the
regulations or orders of the Finance and Capital Market
Commission and laws and regulations adopted in accordance with
the Law On Budget and Financial Management. The suspension of
activities of a commercial company on the basis of a decision of
the merchant shall not exempt the commercial company from drawing
up the annual account.

The provisions of Paragraph three of this Section are not
applicable to:

1) [15 May 2003];

2) associations, foundations, religious organisations and
trade unions. The Cabinet shall determine the structure, volume,
content and the procedures for drafting, examining and submitting
the annual accounts for such persons;

3) [6 April 2006];

4) political organisations (parties) and the associations
thereof. The Cabinet shall determine the structure, volume,
content and the procedures for drafting, examining and submitting
the annual accounts for such organizations and associations.

The provisions of Paragraphs one, two and three of this
Section are not applicable to individual enterprises, farming and
fishing enterprises whose turnover (income) from the economic
transactions does not exceed 300 000 euros during the previous
accounting year and which organise their accounting by the simple
entry system; to the individual merchants and other natural
persons performing economic activities. These enterprises shall
register income and expenditure from the economic activities and
complete returns and forms according to the requirements laid
down in the laws in the tax field or the laws and regulations
adopted in accordance with them.

Individual merchants whose turnover (income) from the economic
transactions exceeds 300 000 euros during the previous accounting
year, shall draw up also a balance sheet and an income and
expenditure statement whose content and the procedures for
drafting and submitting shall be stipulated by the Cabinet.

[6 April 2000; 15 May 2003; 26
February 2004; 6 April 2006; 12 March 2009; 10 June 2010; 19
September 2013; 5 December 2013]

Section 14.

The accounting year shall cover 12 months and it shall usually
coincide with the calendar year. A different beginning and end
for the accounting year may be only if such is determined by the
articles of association, by-law or constitution of the relevant
undertaking or by a partnership agreement.

The accounting year may be changed. A change of the accounting
year shall be substantiated and relevant explanations therefor
shall be provided in the appendix to the annual accounts.

The first accounting year of a newly established undertaking
may cover a shorter or a longer time period, but not longer than
18 months.

If the beginning of the accounting year of an existing
undertaking is changed, the accounting year shall not exceed 12
months.

An accounting year in which an undertaking is reorganised or
terminates its activities, as well as an accounting year in which
its beginning has been changed, may be shorter than 12
months.

The provisions of this Section are not applicable to an
institution which is financed from the State budget or a local
government budget, and a State or local government agency whose
duration, beginning and end of the economic year are laid down by
relevant laws.

[6 April 2000; 15 May 2003; 6 April
2006]

Section 14.1

The provisions of Section 14 of this Law shall not apply to an
undertaking, which in accordance with the Micro-enterprise Tax
Law has acquired the status of a micro-enterprise taxpayer. The
accounting year of such undertaking shall cover 12 months and
coincide with the calendar year. The accounting year, in which
the undertaking commences activities, terminates activities or is
reorganized, may be less than 12 months in duration, however, it
shall end not later than on 31 December of the calendar year.

[18 April 2013]

Chapter
IV
Division of Competence in Accounting

[15 May
2003]

Section 15.

The Cabinet shall issue regulations regarding the maintaining
and organising of accounting, as well as the recording of cash
operations.

[30 September 2010]

Section 15.1

The Ministry of Finance shall develop and implement the State
policy in respect of accounting issues.

[18 April 2013]

[18 April 2013]

[6 April 2006; 10 June 2010; 18
April 2013]

Section 15.2

[18 April 2013]

Chapter V
Liability for Violations of the Law On Accounting of the Republic
of Latvia

Section 16.

Heads of undertakings who have allowed violations of the Law
On Accounting and of other laws and regulations in force
regarding the accounting, the misrepresentation of accounting
data in bad faith, failure to submit reports officially required,
or loss of accounting documents, shall be held liable in
accordance with the procedures laid down in law.

Section 17.

A head of an undertaking shall be liable for the losses cased
to the undertaking, the State his or her fault. Natural and legal
persons occasioned such loss have the right to claim compensation
therefor in accordance with the procedures laid down in laws and
regulations.

Transitional
Provisions

[8 July
1999]

1. The amendment to Section 13, Paragraph three of this Law
shall apply to annual accounts for periods commencing from
1999.

2. Section 9, Paragraph two, Clause three of this Law shall
come into force on 1 January 2001.

[6 April 2001]

3. Until the day of the coming into force of the relevant
Cabinet regulations, but not later than up to 1 November 2003,
the following Cabinet regulations are applicable:

4. Section 15.1, Paragraphs two and three and
Section 15.2 of this Law shall come into force
concurrently with the relevant amendments to the Law On the State
Budget 2003.

[15 May 2003]

5. The amendments to Section 9 and Section 13, Paragraphs five
and six of this Law shall come into force on 1 January 2007.

[6 April 2006]

6. On the day of the coming into force of the Cabinet
regulations referred to in Section 13, Paragraph four, Clause 2
of this Law, but not later than by 1 January 2007, the following
Cabinet regulations are applicable:

7. Amendment to Section 2, Paragraph four, Clause 4 of this
Law regarding the deletion of this Clause, as well as amendments
to Section 9, Paragraph two, Clause 1 and Section 11, Paragraph
three of this Law regarding deletion of the words "individual
enterprise, farming and fishing enterprise" (in the relevant
case) and amendment to Section 13, Paragraph five of this Law
regarding deletion of the words and numbers "individual
enterprises, farming and fishing enterprises whose turnover
(income) from the economic transactions does not exceed 200 000
lats during the previous accounting year " shall come into force
on 1 July 2013.

[10 June 2010]

7.1 The coming into force of the amendments
referred to in Paragraph 7 of this Regulation is revoked.

[18 April 2013]

8. Amendments to Section 15, Paragraph one of this Law
regarding deletion of the second sentence shall come into force
on 1 July 2011.

[30 September 2010]

Informative
Reference to European Union Directive

This Law contains legal norms arising from Directive
2009/101/EC of the European Parliament and of the Council of 16
September 2009 on coordination of safeguards which, for the
protection of the interests of members and third parties, are
required by Member States of companies within the meaning of the
second paragraph of Article 48 of the Treaty, with a view to
making such safeguards equivalent (codified version) (Text with
EEA relevance).

[18 April 2013]

Chairperson of the Supreme Council
of the Republic of Latvia A.Gorbunovs